On June 26, 2017, the Office of Foreign Assets Control (OFAC) announced a settlement with global insurance giant American International Group, Inc. (AIG) for apparent violations of multiple U.S. sanctions regimes, including the regimes relating to Iran, Sudan, Cuba, and Weapons of Mass Destruction Proliferators. The apparent violations involved 555 transactions totaling approximately $396,530 in premiums and insurance claims relating to maritime shipments of goods destined for and transiting through Iran, Cuba, or Sudan, or that involved a Specially Designated National (SDN).
While the overall penalty amount ($148,698) is not high, the settlement is nonetheless notable because the final penalty amount is lower than OFAC’s calculated base penalty of $198,266. This reduced penalty reflects several mitigating factors that OFAC found important. First, AIG voluntarily self-disclosed these violations, which were non-egregious. Second, AIG’s compliance program included recommendations for the use of exclusionary clauses to prevent sanctions violations (even if OFAC found these clauses to be too narrow to be effective). Third, AIG took remedial action upon discovering the violations. Fourth, after submitting its disclosure, AIG cooperated with OFAC’s investigation, provided detailed and organized information to OFAC, and agreed to toll the statute of limitations. Finally, AIG did not have any findings of sanctions violations or penalties during the prior five-year period.
This settlement serves as a good reminder of the importance of maintaining robust compliance policies and procedures, and, when violations are discovered, taking remedial measures and voluntarily disclosing such violations to OFAC promptly. While OFAC’s penalties can be steep, cooperating companies may see their penalties reduced significantly, if not eliminated altogether.